What Did You Buy Today?

[Otter]

(05-21-2021, 05:12 PM)NilesMike Wrote:

(05-21-2021, 10:53 AM)Otter Wrote:

(05-21-2021, 06:29 AM)NilesMike Wrote: I would not leave T for dead just quite yet.

"New" T w/o a large part of their debt, focused on T business, along with shares of the new entity may just work out well.

4%+ yield with the offer of growth is not bad.

I'd rather avoid the 16% drop in equity to $25/share (my guess as to where it ends up after slashing its dividend nearly in half). Lots of ETFs and other funds that own T as an aristocrat will be forced to divest, and a number of DGI investors who have relied on T as a big chunk of their income will do the same (likely well in advance, hence the drop from the recent $32+ highs as soon as the merger/spinoff was announced). There will be additional carnage in the stock price when the cut occurs. 

So, I'm out. T is already in third place when it comes to 5G spectrum, and will be playing catch-up for years. Cooking up a merger/spinoff of an asset that was supposed to be a cornerstone of the business model just 18 months ago, and alienating your core shareholders in the process, is a sure sign of management that is inept (at best). I may invest in the HBO Max/Discovery SpinCo as a growth company once it debuts, but T is giving me strong GE/IBM vibes.

Your scenario is not attributing any value for the shares received in the new spinoff?

Not if it is so saddled with debt that it can’t afford to create lots of new, quality content and grow its user base aggressively.

If that happens, SpinCo can probably make the existing catalogue work for a bit, but it is a recipe for long-term failure.